Birchbox, the cosmetics subscription service company, is set to lay off 25% of its total workforce, including 44 of the 94 employees who work in the company's corporate offices in New York. The layoffs, which are an effort to cut costs, will take place by May 30.
"We are creating more synergy across markets and consolidating globally," said Birchbox CEO and co-founder Katia Beauchamp in a statement to Business Insider. "To reduce redundancies across the US, UK and Spain, we made the difficult decision to downsize our team by about 25% globally. This includes plans to move some of our UK operations to Spain, managing the UK market from the Barcelona office."
Birchbox's business model is based on monthly subscriptions where members receive a box of several makeup samples as well as other cosmetic and beauty products like lotions and perfumes every month.
Recently, the company raised its subscription price from $10 per month into a tiered system ranging from $10 to $15 per month. Beauchamp believes this was the right call for Birchbox. "Our $10 price point was holding us back," she wrote in a blog post.
Valued as much as $545 million in 2014, Birchbox was up to over 1 million subscribers by 2019.
Two years ago, however, Birchbox was acquired by Viking Global Investors, a hedge fund, for only $15 million.
Now, in addition to raising subscription prices, Birchbox is laying off employees with the intention to do what's best for business, though this isn't the first time Birchbox has laid off workers. Back in 2016, the company laid off 80 people.
Considering Birchbox's somewhat recent unimpressive acquisition offer and series of layoffs over the years, particularly in light of heavy competition, their future doesn't look particularly promising at the moment. Time will tell if restructuring corporate offices and switching up pricing models will prove beneficial enough of a turnaround.
Major competitive products in the makeup subscription realm include Target Beauty Box
Harvard Business School graduates Katia Beauchamp and Hayley Barna founded Birchbox in 2010.
- https://www.businessinsider.com/birchbox-ceo-layoffs-quarter-of-employees-2020-2
- https://www.retaildive.com/news/birchbox-cuts-25-of-global-staff/571922/
- https://www.gcimagazine.com/business/marketers/announcements/Birchbox-to-Layoff-25-of-Employees-567661521.html
- https://www.inc.com/30under30/2011/profile-hayley-barna-and-katia-beauchamp-founders-of-birchbox.html
- https://www.goodhousekeeping.com/beauty/g5005/makeup-subscription-boxes/